Market Talk – March 13, 2023

ASIA:

China’s efforts to ramp up lithium extraction could see it accounting for nearly a third of the world’s supply by the middle of the decade, according to UBS AG. The bank expects Chinese-controlled mines, including projects in Africa, to raise output to 705,000 tons by 2025 from 194,000 tons in 2022. That would lift China’s share of the mineral critical to electric-vehicle batteries to 32% of global supply, from 24% last year, according to a note on Friday. The race to secure lithium is playing out at the highest levels, with nations, including the US prioritizing access to the materials necessary for making batteries as the world turns away from fossil fuels. China’s needs are particularly acute because it’s home to the world’s biggest market for new energy vehicles. The rise in Chinese output will include an increase in material derived from lepidolite, a lithium-bearing rock often overlooked as poor quality and environmentally unsound because of its low yield and high energy costs. UBS sees lepidolite in China accounting for 280,000 tons of lithium in 2025, or 13% of global supply, from 88,000 tons last year, as the government continues to support the sector. Beijing has already moved to curb unlicensed lepidolite extraction in Jiangxi province, a major mining hub, as it seeks to exert more control over its deposits.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 decreased 311.01 points or -1.11% to 27,832.96
• Shanghai increased 38.62 points or 1.20% to 3,268.70
• Hang Seng increased 376.05 points or 1.95% to 19,695.97
• ASX 200 decreased 35.90 points or -0.50% to 7,108.80
• Kospi increased 16.01 points or 0.67% to 2,410.60
• SENSEX decreased 897.28 points or -1.52% to 58,237.85
• Nifty50 decreased 258.60 points or -1.49% to 17,154.30

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.00993 or 1.51% to 0.66763
• NZDUSD increased 0.00972 or 1.58% to 0.62342
• USDJPY decreased 1.67 or -1.24% to 133.310
• USDCNY decreased 0.09561 or -1.38% to 6.84249

Precious Metals:

• Gold increased 36.93 USD/t oz. or 1.98% to 1,904.76
• Silver increased 1.27 USD/t. oz or 6.19% to 21.780

Some economic news from last night:

Japan:

BSI Large Manufacturing Conditions (Q1) decreased from -3.6 to -10.5

Some economic news from today:

India:

CPI (YoY) (Feb) decreased from 6.52% to 6.44%

EUROPE/EMEA:

The peak for European Central Bank interest rates will be much higher than thought only a month ago, according to economists polled by Reuters, and they added that stubbornly high inflation would push policymakers to be more aggressive. Having flagged a 50 basis-point lift next week at the previous Governing Council meeting, ECB President Christine Lagarde doubled down on Sunday and said the increase was “very very likely.” Medians in the poll showed the euro zone’s central bank adding 25 basis points at the following three meetings in May, June and July to give a terminal deposit rate of 3.75%, higher than the 3.25% peak expected in a February poll. Euro zone inflation – running at a higher-than-expected 8.5% in February and over four times the bank’s 2% goal was predicted to drift down but remain above target until 2025 at least.

The major Europe stock markets had a negative day:

• CAC 40 decreased 209.17 points or -2.90% to 7,011.50
• FTSE 100 decreased 199.72 points or -2.58% to 7,548.63
• DAX 30 decreased 468.50 points or -3.04% to 14,959.47

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.00822 or 0.77% to 1.07252
• GBPUSD increased 0.0122 or 1.01% to 1.21500
• USDCHF decreased 0.01017 or -1.10% to 0.91103

US/AMERICAS:

Banks across the US reached out to depositors to ensure them that their assets are safe after three banks failed last week. The Dow posted its fifth consecutive day of losses this Monday. The Treasury and Federal Deposit Insurance Corporation issued a joint statement to ensure depositors at Silicon Valley Bank that their insured deposits would be available today. The Fed is implementing a new program, the Bank Term Funding Program, to guarantee deposits. The disasters from last week have many wondering what the Federal Reserve will do at their upcoming meeting. The general consensus is that rates will still rise, but most are betting on a 25 bps hike compared to 50 bps. Some, such as Goldman Sachs, no longer expect the central banks to raise rates at all.

US Market Closings:

• Dow declined 90.5 points or -0.28% to 31,819.14
• S&P 500 declined 5.83 points or -0.15% to 3,855.76
• Nasdaq advanced 49.96 points or 0.45% to 11,188.84
• Russell 2000 declined 28.4 points or -1.6% to 1,744.3

Canada Market Closings:

• TSX Composite declined 186.02 points or -0.94% to 19,588.9
• TSX 60 declined 11.98 points or -1.01% to 1,177.64

Brazil Market Closing:

• Bovespa declined 496.84 points or -0.48% to 103,121.36

ENERGY:

The oil markets had a mixed day today:

• Crude Oil decreased 0.999 USD/BBL or -1.30% to 75.681
• Brent decreased 0.974 USD/BBL or -1.18% to 81.806
• Natural gas increased 0.1506 USD/MMBtu or 6.20% to 2.5806
• Gasoline decreased 0.0389 USD/GAL or -1.47% to 2.6069
• Heating oil increased 0.004 USD/GAL or 0.14% to 2.7769

The above data was collected around 12:18 EST on Monday

• Top commodity gainers: Natural Gas (6.20%), Palladium (5.63%), Silver (6.19%) and Platinum (3.96%)
• Top commodity losers: HRC Steel (-2.05%), Lumber (-1.52%), Rhodium (-4.12%) and Coffee (-3.98%)

The above data was collected around 12:24 EST Monday.

BONDS:

Japan 0.311% (-8.1bp), US 2’s 4.17% (-0.414%), US 10’s 3.5110% (-18.4bps); US 30’s 3.63% (-0.074%), Bunds 2.271% (-22.5bp), France 2.816% (-19.8bp), Italy 4.192% (-13.2bp), Turkey 10.95% (-42bp), Greece 4.296% (-2.6bp), Portugal 3.229% (-16.1bp); Spain 3.375% (-17.1bp) and UK Gilts 3.396% (-24.6bp).

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